Brookings Institution finds disparities in student debt levels for black and white borrowers

[Jimi Swagger]

Stop spending those refund checks on bottle service, shoes, weed, mama's light bill and Rooms 2 Go Furniture for those student apartments and pay off those student loans instead.

A new study released by the Brookings Institution finds disparities in student debt levels for black and white borrowers grow after graduation, a trend partly attributable to higher enrollment rates for black students in graduate programs, especially at for-profit institutions. That jump in enrollment is linked to higher federal borrowing rates introduced in 2006 and the weak job market -- especially for black college grads -- after the 2008 recession.

Graduate enrollment is a worthwhile investment, the study finds, but comes with more financial risk for African-American students both because of their concentration in the for-profit sector and because of lower rates of graduation.

The study, written by Judith Scott-Clayton, a Columbia University associate professor of economics and education, and research associate Jing Li, is based on data from two nationally representative surveys conducted by the U.S. Department of Education of college graduates from 1993 and 2008. It calls for comprehensive data tracking student financial aid and debt by race and argues that focusing policy on undergraduate borrowing alone will address only part of the racial disparity in student debt. A number of scholars and advocacy groups are pressuring the federal government to begin tracking borrowers by race to aid research into the causes or size of racial disparities.

The Brookings report acknowledges that lack of adequate data could lead to understatements of actual racial disparities in student loan debt. Information on amounts borrowed, future earnings and loan defaults cannot be broken down by race, the study says, and information on race is not collected on the Free Application for Federal Student Aid or the National Student Loan Data System, meaning researchers and policy makers don’t have information on racial disparities for those who take out debt and leave college without a degree -- a group especially likely to default on student loans.

Among the key findings of the study:

• Almost half of black graduates owe more on their federal undergraduate loans four years after leaving college than they did immediately after graduating, more than double the rate of white graduates.
• Black borrowers have a default rate of 7.6 percent within four years -- three times the rate of white graduates.
• Black graduates with debt are more likely than white graduates to have interest accumulate faster than they pay off the balance of a loan.
• Borrowing for graduate school accounts for 45 percent of the black-white student debt disparity.

The study also argues that income-driven repayment plans treat the symptom of the racial debt disparity without addressing the underlying causes.

“What was shocking was the magnitude of the debt four years after graduation. It’s huge,” said Scott-Clayton.

Debt shouldn’t be seen as a bad word, she said, but the study indicates that the system isn’t working the same way for everyone.

The study suggests that black graduates from the class of 2008 may have enrolled in graduate school at substantially higher rates than other groups did because of weak job markets. And more than a quarter of those graduate students enrolled in for-profit institutions, compared to 9 percent for white college graduates.

“That just begs the question what is going on in that sector,” Scott-Clayton said.

Robert Kelchen, an assistant professor of education at Seton Hall University who focuses on higher education finance and student aid, said the study is revealing of the large role graduate student loan debt plays in racial disparities.

He said he had mixed feelings about collecting data on student borrowers’ race because asking about race on a form like the FAFSA could cause some students to think they would be eligible or ineligible for aid because of their race. The department would need to explain to borrowers that that information would not affect whether they received aid, Kelchen said.

But he said the only source of such data now is through national surveys with limited scope.

“It highlights the need for more data on student lending in general,” Kelchen said.

Pauline Abernathy, executive vice president of the Institute for College Access and Success, said the study underscores the need for the Department of Education to collect institution and student level data on student borrowers. TICAS was among 40 consumer advocacy and civil rights groups that sent a letter to Education Secretary John B. King Jr. in August asking that the department start collecting the data.

“It stands to reason that the disparities for more recent students could be even greater than what is in this report,” Abernathy said.

Black-white disparity in student loan debt more than triples after graduation | Brookings Institution

 

[ⒶⓁⒾⒶⓈ]

Sounds about right.. And it stands to reason that a poorer student would need more to get by and have less financial understanding of the loan system.

 

[hashmander]

in terms of the college going population, blacks are disproportionately represented in the private for profit colleges, both 2 and 4 year. where as other minority groups are more proportionally represented and whites underrepresented.

so when the obama administration goes after these for profit sham schools and these alt righty whities are posting here about anti free market and all that bullshyt and then trying to act like they're black in another thread with "what has he ever done for black people? where is the "this is for black people executive action." well that was an example of doing something that affects black students negatively without going out and saying "WE'RE DOING THIS BLACK PEOPLE"

 

[Serious]

in terms of the college going population, blacks are disproportionately represented in the private for profit colleges, both 2 and 4 year. where as other minority groups are more proportionally represented and whites underrepresented.

so when the obama administration goes after these for profit sham schools and these alt righty whities are posting here about anti free market and all that bullshyt and then trying to act like they're black in another thread with "what has he ever done for black people? where is the "this is for black people executive action." well that was an example of doing something that affects black students negatively without going out and saying "WE'RE DOING THIS BLACK PEOPLE"

@Brady Hoke's Artery

 

[Mook]

in terms of the college going population, blacks are disproportionately represented in the private for profit colleges, both 2 and 4 year. where as other minority groups are more proportionally represented and whites underrepresented.

so when the obama administration goes after these for profit sham schools and these alt righty whities are posting here about anti free market and all that bullshyt and then trying to act like they're black in another thread with "what has he ever done for black people? where is the "this is for black people executive action." well that was an example of doing something that affects black students negatively without going out and saying "WE'RE DOING THIS BLACK PEOPLE"

Of course these people never understand that Obama or any politician cant ever do something for one race and say it explicitly too.

There is no Hispanic issues. You just hear immigration if they do say it, and that affects everyone. Jamaicans, Africans, and etc.

 

[Jimi Swagger]

Of course these people never understand that Obama or any politician cant ever do something for one race and say it explicitly too.

There is no Hispanic issues. You just hear immigration if they do say it, and that affects everyone. Jamaicans, Africans, and etc.

in terms of the college going population, blacks are disproportionately represented in the private for profit colleges, both 2 and 4 year. where as other minority groups are more proportionally represented and whites underrepresented.

so when the obama administration goes after these for profit sham schools and these alt righty whities are posting here about anti free market and all that bullshyt and then trying to act like they're black in another thread with "what has he ever done for black people? where is the "this is for black people executive action." well that was an example of doing something that affects black students negatively without going out and saying "WE'RE DOING THIS BLACK PEOPLE"

The better question is why are Black and Latino students not opting for more affordable public and private nonprofit universities/junior colleges instead of private for profits?

 

[Bernie Madoff]

Sounds about right.. And it stands to reason that a poorer student would need more to get by and have less financial understanding of the loan system.

lol i went to a private school that cost $23k a semester... I remember being so happy to be going to college i didnt give a fucc... I remember being gassed by the fact I could borrow $7,500 each semester

I lasted a semester before I realized i could just go to a state school for $20k less

 

[hashmander]

The better question is why are Black and Latino students not opting for more affordable public and private nonprofit universities/junior colleges instead of private for profits?

the targeted advertising is fierce man. and if advertising didn't work, so much money wouldn't be spent on it.

 

[mamba]

One of the best things my parents ever did for me was to encourage me to attend the cheap state school for college.

I walked away debt free with a solid education.

My quality of life has been awesome because of that simple move.

If you have siblings, cousins, etc who are heading off to college next fall, make sure you pull them aside and give them some real talk about student loan debt and how to pick a major.

Don't let them make the same mistakes, friends.

 

[No1]

in terms of the college going population, blacks are disproportionately represented in the private for profit colleges, both 2 and 4 year. where as other minority groups are more proportionally represented and whites underrepresented.

so when the obama administration goes after these for profit sham schools and these alt righty whities are posting here about anti free market and all that bullshyt and then trying to act like they're black in another thread with "what has he ever done for black people? where is the "this is for black people executive action." well that was an example of doing something that affects black students negatively without going out and saying "WE'RE DOING THIS BLACK PEOPLE"

This is a weak example. Every single law or policy has effects for every community. This is one of those "a rising tide lifts all boats" examples that ignores that race-neutral policies seldom get at the underlying inequality and racial disparities. For example, why is it that black and latino people have more student loan debt than white people? Cracking down on these schools deals with the effects, but never gets at the root which is income, housing and wealth inequality. The gap between white and black people increased under Obama because the ground that black people were sitting on was hollow.

 

[Jimi Swagger]

the targeted advertising is fierce man. and if advertising didn't work, so much money wouldn't be spent on it.

Ignorance and lack of research by the students/parents don't play a part? Especially since there are several community colleges that offer associate degrees or transfer to university programs. Sounds like people are putting themselves in debt by looking for convenience and instate gratification seemingly an innate character flaw amongst Black Americans, specifically multigenerational Black Americans when it comes to long-term decision making skills.